In re: AGUSTIN J. JARAMILLO and LILLIAN V. JARAMILLO, Debtors.
No. 18-13231-j7
UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW MEXICO
April 14, 2020
MEMORANDUM OPINION AND ORDER
The Chapter 7 Trustee filed an Objection to Debtor's Claim of Exemption ("Objection to Exemptions") requesting the Court to disallow the Debtor's claimed exemption under 11 U.S.C. § 522(d)(1)1 in a residence located in San Luis, Colorado, and to limit the remainder of the Debtors' claimed exemptions under § 522(d)(5) in other real property. See Docket No. 14. Because Mr. Jaramillo uses the real property in San Luis, Colorado as "a residence," he can claim an exemption in that property under § 522(d)(1). However, because the federal exemption amounts are insufficient to exempt the equity in all of the Debtors' real property, the Court will sustain the Trustee's Objection to Exemption, in part.
Mr. and Mrs. Jaramillo filed a joint voluntary petition under Chapter 7 of the Bankruptcy Code on December 31, 2018. See Docket No. 1. The Chapter 7 Trustee filed the Objection to Exemptions on February 27, 2019. See Docket No. 14. In response, the Debtors stated that Mr. Jaramillo lived in New Mexico only 71 days during the 180 day period preceding the filing of the chapter 7 bankruptcy petition, and indicated that the Debtors intended to file a motion to "sever and dismiss" Mr. Jaramillo from the bankruptcy case. See Docket No. 15. On April 1, 2019, the Debtors filed a Motion to Dismiss Agustin J. Jaramillo ("Motion to Dismiss"),
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asserting that because Mr. Jaramillo lived most of the year in Colorado, venue is improper. See Docket No. 18. The Chapter 7 Trustee objected to the Motion to Dismiss. See Docket No. 22.
In September, counsel for the Debtors requested a hearing on the Motion to Dismiss. See Docket No. 24. The parties conducted discovery related to the Motion to Dismiss and the Objection to Exemptions until December 2, 2019. See Docket No. 26. The Court held a final, evidentiary hearing on both motions on December 18, 2019. The Court denied the Motion to Dismiss, concluding that because the Debtors voluntarily chose to file a bankruptcy case in this district and actively participated in the case, they waived any right to object to venue. See Docket No. 37. The Court deferred its ruling on the Objection to Exemptions and fixed a deadline of January 6, 2020 for the Debtors to file a motion to sever Mr. Jaramillo from this joint bankruptcy case if they wished to do so.2 See Docket No. 38.
Debtors did not file the Motion to Sever Agustin J. Jaramillo ("Motion to Sever") until after the deadline. See Docket No. 39. Consequently, the Chapter 7 Trustee filed a motion to strike the Motion to Sever as untimely. See Docket No. 41. After notice and a hearing, the Court granted the Trustee's motion to strike the Motion to Sever. See Docket No. 46. The Debtors received a discharge on February 20, 2020. See Docket No. 47.
The Debtors elected the federal bankruptcy exemptions available under § 522(b)(2) and § 522(d). Debtors' Schedule C, identifying property claimed as exempt, includes the following real properties and claimed exemptions:
| Property | Claimed Exemption Amount | Basis for Claimed Exemption |
| 714 Main Street, San Luis, CO ("San Luis Property") | $17,500.00 | § 522(d)(1) |
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| 5 acres unimproved land in CO ("5 acre tract") | $3,750.00 | § 522(d)(5) |
| 15 acres unimproved land in CO ("15 acre tract") | $3,250.00 | § 522(d)(5) |
| 6120 Cyonus Ave, Albuquerque, NM ("NM Property") | $3,004.00 | § 522(d)(5) |
None of the properties in Colorado are community property. The San Luis Property is Mr. Jaramillo's sole and separate property. Mr. Jaramillo owns a ¼ joint tenancy interest in the 5 acre tract with his three brothers, and a ½ joint tenancy interest in the 15 acre tract. The 5 acre tract and the 15 acre tract are unencumbered. The Debtors scheduled San Luis Property with a $8,607 claim against it. See Schedule D - Exhibit 1, p.21.3 The NM Property is community property, and is subject to a mortgage in the amount of $126,996. Id.
Debtors scheduled the San Luis Property with a value of $35,000; the 5 acre tract with a value of $15,000; and the 15 acre tract with a value of $6,500. Debtors scheduled the NM Property with a value of $130,000. See Schedule A/B - Exhibit 1, pp 10 - 12. At the final hearing, the Chapter 7 Trustee elicited some conflicting evidence of the value of the various properties.
A Comparative Market Analysis for the San Luis Property dated February 13, 2019 reflected a market price of between $60,000 and $70,000. See Exhibit A, pp. 40 - 43. However, the person who prepared the analysis has not seen the house. Id. at p. 43. Mr. Jaramillo disagrees with the estimated value because he believes the properties used as comparison properties are not really comparable to the San Luis Property. The Real Property 2019 Notice of Valuation valued the property at $51,485. Id. at p. 35. Mr. Jaramillo testified that he believes the San Luis Property
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is worth between $30,000 to $40,000. Several years ago, Mr. Jaramillo obtained an email from an associate broker for ERA Werner Realty, Inc. stating that she found three homes in the area that sold in 2009 for $30,000, $36,000, and 24,999. See Exhibit 1, p. 39.
For the 15 acre tract, a valuation estimate dated February 8, 2019 from Access Realty valued the property at $28,987. See Exhibit 1, p. 83. Mr. Jaramillo disagrees with this value and thinks the 15 acre tract is worth much less. The Real Property 2019 Notice of Valuation for the 15 acre tract values the property at $9,500, and for 2018, the stated value of the 15 acre tract on the Real Property Notice of Valuation was $12,000. See Exhibit 1, p. 86.
A valuation estimate dated February 8, 2019 from Access Realty valued the 5 acre tract at $9,199. See Exhibit 1, p. 86. Mr. Jaramillo believes the 5 acre tract is actually worth more than the opinion of value provided by Access Realty. He purchased the 5 acre tract for $16,000 in 1984, and he testified that he believes it is now worth between $16,000 and $19,000.
Finally, an ARMLS Seller's Report prepared January 22, 2019 for the NM Property values the property at $140,290, but gives an estimated range of $124,663 to $155,477. See Exhibit 1, p.74. Mr. Jaramillo testified that he and Mrs. Jaramillo purchased the NM Property for $139,000, and that he believes the NM Property is worth $140,000.
The San Luis Property is residential property that has been in Mr. Jaramillo's family for a very long time. The home was built in 1932, and Mr. Jaramillo lived there as a child. He eventually purchased the San Luis Property from his parents. At some point Mr. Jaramillo owned the San Luis Property in joint tenancy with his son. Mr. Jaramillo's son since passed away, and Mr. Jaramillo is now the sole owner. Mr. and Mrs. Jaramillo were married in 1996 and lived in the San Luis Property until 2005. At that time, they purchased the NM Property because Mrs. Jaramillo wanted to live closer to her children.
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Mr. Jaramillo will be 87 years old in May of 2020. In the summer months and early fall, and during hunting season, he likes to live in the San Luis Property. Mrs. Jaramillo visits Mr. Jaramillo at the San Luis Property from time to time. Mr. Jaramillo typically resides at the San Luis Property from Memorial Day until the middle or end of...
